Qantas Essay Example

  • Category:
    Business
  • Document type:
    Assignment
  • Level:
    High School
  • Page:
    1
  • Words:
    613

Whether the company has been making profit

Introduction

The graphs below and the attached excel sheet analyzes how the company performed financially over the three years 2010, 2011 and 2012. According to the analysis, the company has been making profit despite the fact that it made a loss in 2012. According to the management, the huge loss in 2012 is attributed to the huge increase in fuel prices as well as the huge cost incurred in making the company’s strategic plan operational. In other words, given the company’s increasing revenue trend, the company could be much profitable if it comes up with cost cutting measures (Davidson, 2005). The company’s performance trend for the years 2010, 2011 and 2012 is analyzed below;

The company’s revenue has increased from 13,722,000,000 dollars in 2010 to 14,894,000,000 dollars in 2011. This was an 8.5% increase. Similarly, the revenue in creased from 14,894,000 dollars in 2011 to 15,724,000, 000 dollars in 2012. This was a 5.6% increase. This shows an increasing trend in the company’s sales revenue for the three years under review as depicted in the graph above.

Investigate and evaluate the recent financial performance of Qantas. This should include profitability trends, overall sales analysis and the share price of the company. Looking at 2010 - 2012

Qantas Group Limited, 2012

  1. Profitability- the company’s profitability registered mixed signals during the three years under review. The company’s profit increased from 116,000,000 dollars in 2010 to 249,000,000 dollars in 2011. This was a 114.7% increase in profit. However, the company’s profit sharply declined from 249,000,000 dollars in 2011 to 244,000,000 dollars in 2012. This was a 200% decline in profit. The decline in the company’s level of income is largely attributed to the sharp increase in the company’s operating expenses in the year 2012 as shown in the attached excel sheet. The most notable increase in expenses is the sharp increase in fuel prices during the year. Furthermore, the huge cost incurred in operational zing the company’s strategic plan has been noted to cause a decline in the profit after tax (Joe, 2009).

Statutory income in $000

Investigate and evaluate the recent financial performance of Qantas. This should include profitability trends, overall sales analysis and the share price of the company. Looking at 2010 - 2012 1

Qantas Group Limited, 2011

c) Share prices

Unlike the sales revenue, Qantas share prices have been on the decline as shown in the graph above. The company’s average share prices declined from $ 2.66 in 2010 to $2.42 in 2011. This was a 9.02% decline. Similarly, the average share prices declined from $2.42 in 2011 to$1.57 in 2012. This was a rapid decline of 35.12%. This decline is attributed the company’s declining profitability as observed above. Furthermore, the company’s failure to pay dividends for 2011 and 2012 may have accelerated the decline (Krishna, 2009).

Investigate and evaluate the recent financial performance of Qantas. This should include profitability trends, overall sales analysis and the share price of the company. Looking at 2010 - 2012 2

Qantas Group Limited, 2012

Conclusion

As explained above, the company made profit in 2010 and 2011. However, the huge loss made in 2012 casts some doubt about its financial performance. As this is attributed to the sharp increase in the company’s expenditure, there is need to come up with cost cutting strategies. This is because the company’s revenue has increased over the years. The company’s share prices decline over the three years depicts the company’s declining performance although it may also be attributed to the company’s failure to declare dividends over the years (McNally, 2010).

References:

Davidson, M2005, Financial statements: Their analysis and usefulness, Oxford, Oxford University Press.

Joe, B2009, Financial statements analysis, London, Rutledge.

Krishna, B2009, Business analysis and valuation, International Financial Journal, vol.56, no.2, pp19-25.

McNally, M2010, Cases in financial reporting, Oxford, Oxford university press.

Qantas Group Limited, 2012, Qantas Data Book 2012, Retrieved June 2, 2013, from;

http://www.qantas.com.au/infodetail/about/investors/qantas-data-book-2012.Pdf

Qantas Group Limited, 2012, Qantas Data Book 2012, Retrieved June 2, 2013, from;

http://www.qantas.com.au/infodetail/about/investors/qantasDataBook2011.pdf

Qantas Group Limited, 2011, Annual Report for the year 2012, Retrieved June 2, 2013, from;

http://www.qantas.com.au/infodetail/about/investors/2012AnnualReport.pdf

Qantas Group Limited, 2011, Annual Report for the year 2011, Retrieved June 2, 2013, from;

http://www.qantas.com.au/infodetail/about/investors/2011AnnualReport.pdf